Indian IPO

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Saturday, February 20, 2010

United Bank IPO to open on Feb 23, price band at Rs 60-66

United Bank of India, a public sector banking institution with branches in 28 States and in 4 Union Territories in India, intends to make an initial public offering (IPO) of 5 crore equity shares of face value of Rs 10 each for cash at a price to be determined through a 100% book building process.

The bank has fixed the issue price band at Rs 60-66 per share and also announced 5% discount to retail investors, reports CNBC-TV18. The IPO will open on February 23, 2010 and close on February 25, 2010.

The IPO comprises of a net issue of 4.75 crore equity shares of face value of Rs 10 each to the public and a reservation of 25 lakh equity shares for subscription by eligible employees. The issue shall constitute 15.80% of the post issue paid-up capital and the net issue shall constitute 15.01% of the post-issue capital of the bank.

This issue has been graded by CARE as CARE IPO grade 4 indicating above average fundamentals and by ICRA as ICRA IPO grade 3 indicating average fundamentals.

At least 60% of the net issue shall be allotted on a proportionate basis to qualified institutional buyers (QIB). 5% of the QIB portion shall be available for allocation to Mutual Funds only and the remaining QIB portion shall be available for allocation to all the QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the issue price. If at least 60% of the net issue cannot be allotted to QIBs, then the entire application money shall be refunded. Further, not less than 10% of the net issue shall be available for allocation on a proportionate basis to non-institutional bidders and not less than 30% of the net issue shall be available for allocation on a proportionate basis to retail individual bidders, subject to valid Bids being received at or above the issue price net of retail discount.

Investors, except QIBs, may participate in this Issue through the Application Supported by Blocked Amount process by providing the details of their respective bank accounts in which the corresponding Bid Amounts will be blocked by the Self Certified Syndicate Banks (SCSBs).

The book running lead managers to the issue are SBI Capital Markets Limited, Edelweiss Capital Limited and Enam Securities Private Limited.

The equity shares offered by the bank through the issue are proposed to be listed on Bombay Stock Exchange and National Stock Exchange of India.

The bank is currently a wholly-owned undertaking of the Government of India. Its business is principally divided into retail banking, corporate/ wholesale banking, priority sector banking, treasury operations and other banking services such as agency functions for insurance and mutual fund distribution, pension and tax collection services.

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